Less than one month after Crosspoint Venture Partners cited a dearth of quality early-stage opportunities as the primary reason for canceling its $1 billion 2001 Fund, fellow start-up investor Mohr, Davidow Ventures closed an $850 million vehicle targeted at the very market Crosspoint so publicly shunned.
“We’re still seeing a lot of quality entrepreneurs,” said Rob Chaplinsky, a partner with Mohr, Davidow Ventures. “A lot of the comments about there not being deal flow in the market are tied to the current fortunes of the Nasdaq and short-term-oriented views.”
It seems that the limited partner community agreed – including a handful of institutional players that had initially offered capital commitments to Crosspoint. Overall, leading limited partners in Mohr, Davidow Ventures VII include the Ford Foundation, Harvard Management Co., Horsley Bridge Partners, Stanford Management Co. and the University of Notre Dame.
“Our limited partners have been with us for a long time,” Chaplinsky said. “Venture capital as an asset class has historically been a high performer and, on a relative basis, we should be able to help continue that track record.”
But this may not have simply been a case of venture business as usual, especially considering that Mohr, Davidow Ventures managed to secure $850 million in the midst of what has become the toughest fund-raising environment since the dawn of the New Economy. Instead, investors paid close attention to the firm’s relatively modest fund sizes and traditionally cautious investment pace.
“Even though this fund is a lot bigger than the earlier ones, they aren’t in a rush to close it out and start another one,” said one limited partner in the new vehicle.
Fund VII is designed to invest in approximately 40 deals over the next three to four years. It is important to note, however, that the firm has enough dry powder remaining in its $300 million Fund VI that there are no plans to begin drawing on the new capital until February.
The firm will invest across the broad spectrum of early-stage technology companies, including likely stakes in firms that specialize in networking, communications, enterprise software, semiconductors and Internet services.
The only significant restriction is that Mohr, Davidow Ventures mostly avoids opportunities outside of the U.S. or Canada due to what it perceives as a lack of relevant organizational expertise. “I don’t think that you can easily extend one form of success across the water,” Chaplinsky said. “There are plenty of deals here in which we can spend this money over the next couple of years. Europe and Israel funds are just distractions.”
Dan Primack can be contacted at Story Feedback.